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Simple English definitions for legal terms

Rule 506

Read a random definition: prudent-operator standard

A quick definition of Rule 506:

Rule 506 is a regulation by the Securities and Exchange Commission (SEC) that allows companies to offer an unlimited amount of securities through private placement under Regulation D. Private placement means that the company can sell securities without having to file a registration statement, which is usually required for public offerings. However, the company must comply with certain restrictions, such as not selling to more than 35 non-accredited investors and not advertising the offering to the public. Accredited investors, such as large financial institutions or high net-worth individuals, can invest without restrictions. Investors in a Rule 506 offering receive restricted securities, which means they cannot freely resell their securities without filing a registration statement or reselling under an exemption.

A more thorough explanation:

Rule 506 is a regulation created by the Securities and Exchange Commission (SEC) that allows companies to offer an unlimited amount of securities through private placement under Regulation D. Private placement means that the securities are not offered to the general public, but rather to a select group of investors.

For a company to comply with Rule 506, they must meet certain requirements:

  • The company can sell securities to an unlimited number of accredited investors, which are typically large financial institutions or high net-worth individuals.
  • The company can sell securities to up to 35 non-accredited investors, but these investors must have sufficient knowledge in financial and business matters to evaluate the investment.
  • The company cannot advertise the offering to the general public.
  • Investors in a Rule 506 offering receive restricted securities, which means they cannot freely resell their securities.

For example, a startup company may want to raise money to fund their operations. Instead of going public and offering their securities to the general public, they may choose to offer their securities through private placement under Rule 506. They can offer their securities to a select group of investors, such as venture capitalists or angel investors, who have the financial resources and expertise to evaluate the investment.

Another example is a real estate developer who wants to raise money to fund a new project. They may offer their securities through private placement under Rule 506 to a select group of investors who are interested in investing in real estate. These investors may include high net-worth individuals or institutional investors who have experience investing in real estate.

Rule 504 | Rule Against Perpetuities

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got a random stanford email and almost had a heart attack
ALSO CONGRATS!
Congrats1!
21:15
Miami A, yall I'm so excited I could cry.
21:15
Feel like I can finally stop holding my breath!! Whew!!!
[] baddestbunny
22:16
every time I get accosted by a strange man who follows me around because my male coworkers were too busy talking to walk me back to my car I get closer to saying we need to bring back traditional gender roles
Dkk
22:32
Nice! @Macaque
Dkk
22:32
@Aromatic, Have to guess.
Dkk
22:33
That sucks @Bunny do you have to go to the hospital?
[] baddestbunny
22:40
I said accosted not assaulted
23:35
guys. my notre dame address just went long is this good or bad
1a2b3c4d26z
23:37
Oooooo me too
23:37
omg is this good or bad
Dkk
23:47
Idk if gender roles are gunna fix that then.
23:49
it looks like most people who applied in october last cycle didn't get a decision until january... does it even mean anything that our addresses went long??
hows ED 2 compared to ED 1?
Dkk
0:10
No idea
windyMagician
0:34
reporting live to say my ndls address also went long
does it mean anything ^
Dkk
2:21
NDLS and Fordham took a very long time last year. It's good info for people to know.
[] baddestbunny
4:29
let’s get after it boys and girls
Dkk
5:21
I gtg to bed soon.
Dkk
5:22
Big day today. Gunna be a crazy one. I will sleep through the first half.
good morning lsd it is 5 am EST
also jazzy my ndls address went long ages ago i sadly do not think it means anything
my stanford address also went long LOL i think at most it's an indicator it's under review
WorthlessAttractiveZombie
7:44
My berkeley paragraph finally disappeared. I definitely think it is just an indicator that they are actively reviewing files, and does not mean anything about A, WL, or Rs
WorthlessAttractiveZombie
7:46
Also has anyone's date disappeared for W&L? Mine did last night
7:55
@WorthlessAttractiveZombie: mine did yesterday morning
7:56
Oops sorry I meant Vilanova. Mine disappeared last week
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